MicroStrategy Acquires More Bitcoin Amid Market Recovery

Business intelligence firm and major Bitcoin investor, MicroStrategy, has announced that it is acquiring more Bitcoin amid the recent cryptocurrency market recovery. According to a recent form 8-K filing with the United States Securities and Exchange Commission, MicroStrategy repaid its $205 million loan to Silvergate at a 22% discount and acquired 6,455 Bitcoin for $150 million. The latest purchase brings the total amount of BTC held by the company to 138,955, which was bought for $4.1 billion at an average price of $29,817 per coin.

The company acquired its latest batch of Bitcoin between Feb. 16, 2023 and March 23, 2023. The purchase marks MicroStrategy’s first Bitcoin acquisition of 2023, with the previous purchase taking place in late December 2022, when the company bought 2,395 BTC for $42.8 million at an average price of $17,181 per coin during the period from Nov. 1 to Dec. 21.

In addition to the BTC purchase, MicroStrategy sold class A common stock worth $500 million. According to the latest updates, the company issued and sold an aggregate of 1,348,855 shares under the sales agreement for aggregate net proceeds of approximately $339 million.

As previously announced, MicroStrategy’s subsidiary, MacroStrategy, received a $205 million term loan from Silvergate Bank in March 2022 under its Silvergate Exchange Network Leverage program. The loan was collateralized by certain Bitcoin owned by MacroStrategy and had a scheduled maturity date of March 23, 2025. Under the terms of the credit agreement, MacroStrategy was required to maintain a loan to collateral value ratio of less than 50%.

On March 24, 2023, MacroStrategy and Silvergate entered into a prepayment, waiver, and payoff to credit and security agreement, with MacroStrategy voluntarily prepaying Silvergate around $161 million in full repayment. According to the filing, “Upon Silvergate’s receipt of the payoff amount, the credit agreement was terminated, and Silvergate released its security interest in all of MacroStrategy’s assets collateralizing the loan, including the Bitcoin that was serving as collateral.”

MicroStrategy’s co-founder and former CEO, Michael Saylor, took to Twitter to announce the loan repayment and Bitcoin acquisition. The company’s ongoing acquisition of Bitcoin has made it one of the largest institutional holders of the cryptocurrency.


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Kraken Halts ACH Deposits and Withdrawals via Silvergate

In a move that has disrupted the cryptocurrency industry, Kraken, one of the world’s largest cryptocurrency exchanges, has announced that it will no longer support ACH deposits and withdrawals via Silvergate, citing difficulties with the automated clearing house. According to reports, Kraken sent an email notice to its users on March 22, notifying them that ACH deposits and withdrawals would no longer be available from March 27.

Kraken has assured its users that no other services would be affected by this change, including ACH instant purchases via Online Banking. The exchange has also advised its users to use alternative funding options, such as MVB Bank for Fedwire deposits and withdrawals, and other instant purchase options, to ensure an uninterrupted funding experience.

Kraken has joined the growing list of cryptocurrency exchanges that have halted their ACH deposits and withdrawals via Silvergate. The Winklevoss brothers-founded exchange, Gemini, also stopped accepting customer deposits and processing withdrawals through Silvergate ACH and wire transfers on March 2.

Silvergate is one of the crypto-friendly U.S. banks that collapsed in early March, alongside other lenders like Silicon Valley Bank, posing major challenges for the cryptocurrency industry. Many cryptocurrency firms hold significant exposure to these banks, which has led to disruptions in the cryptocurrency market.

Kraken joined the Silvergate Exchange Network in 2019, which allowed the exchange to offer deposits and withdrawals in U.S. dollars from Silvergate accounts. Kraken has assured its users that its team is working to make ACH funding available again as soon as possible.

Kraken is a cryptocurrency exchange founded in 2011 by Jesse Powell, who is currently the CEO. The exchange is based in San Francisco, California, and is one of the largest cryptocurrency exchanges in the world, trading over $1 billion daily, according to data from CoinGecko.

Silvergate is a U.S.-based bank that is known for its cryptocurrency-friendly policies. The bank is based in La Jolla, California, and was founded in 1988. In 2019, Silvergate launched the Silvergate Exchange Network, which allows cryptocurrency exchanges to offer deposits and withdrawals in U.S. dollars from Silvergate accounts.

Automated clearing house (ACH) is an electronic funds transfer system that allows businesses and consumers to send and receive payments electronically. ACH transfers are commonly used for direct deposit, payroll, and bill payments. ACH transfers are typically slower than wire transfers but are more cost-effective.

The cryptocurrency industry has faced significant challenges in recent years due to the lack of regulatory clarity and the volatile nature of cryptocurrencies. The industry has also faced challenges with banking relationships, as many traditional banks are hesitant to work with cryptocurrency firms due to concerns over money laundering and fraud. As a result, many cryptocurrency firms have turned to banks like Silvergate, which have more favorable policies towards cryptocurrencies.


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Silvergate Bank Earns Nearly $60m in Q1, Net Income Hits $24.7m

American Commercial bank Silvergate Capital, a bank focused on digital currencies, reports financial results for the first quarter of 2022.

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According to the financial report, the company’s Q1 revenue in 2022 is $59.9 million, a year-on-year increase of 93%, and its net income is as high as $24.7 million, a year-on-year increase of 94%.

The bank focuses on giving fiat credits that are crypto collateralised to corporate customers. This will happen as a Silvergate Exchange Network (SEN), a specially crafted remittance structure for huge customers such as cryptocurrency exchanges.

During the first quarter, the company facilitated transactions between cryptocurrency exchanges and financial institutions worth as much as $142 billion.

However, due to the ongoing downturn in the cryptocurrency market, SEN transfers were down from $167 billion in the first quarter of 2021. Bitcoin (BTC) and Ethereum (ETH) spot volumes were down 33% year-over-year.

Silvergate has emerged to be a reckoning force in the cryptocurrency sphere. It offers services to reputable global cryptocurrency firms such as Coinbase, Xapo, Bitstamp, and Genesis Trading.

Rebecca Rettig, a general counsel for Aave Companies, the team behind the decentralised finance (DeFi) platform Aave, is assuming a new role at Silvergate bank, a leading bank for innovative businesses in fintech and cryptocurrency.

Silvergate bank acquired the cryptocurrency technology backbone of Facebook’s Diem Association to keep the prospect alive.

Silvergate wants to leverage the technology with its own crypto expertise to launch a stablecoin digital currency later this year.

The stablecoin could serve as a cryptocurrency alternative to Mastercard and Visa with streamlined international remittances and lower transaction fees.

Image source: Shutterstock


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Crypto.com Taps Silvergate to Attract Institutional Market

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Crypto.com is working with Silvergate to introduce fiat deposits and withdrawals for its institutional clients.

Crypto.com Onboards Institutions

Crypto.com is making it easier for institutions to enter crypto.

The exchange announced a new partnership with financial infrastructure solutions provider Silvergate Tuesday, enabling institutions to deposit and withdraw U.S. dollars funds from their bank accounts. 

Crypto.com’s clients will now have access to the Silvergate Exchange Network, a near-real-time payments platform that lets users transfer U.S. dollars at any time free of charge. The new feature will be available to institutional clients in all of the exchange’s available markets.

Kris Marszalek, the co-founder and CEO of Crypto.com, said of the partnership: 

“Silvergate’s products and services bridge the gap from the traditional financial world to the crypto world, which supports our mission to ‘accelerate the world’s transition to cryptocurrency.’ We look forward to extending the service to more customers.”

The Silvergate partnership is the latest in a long list of developments as Crypto.com eyes mainstream adoption. In October, the firm kicked off a $100 million advertising campaign that featured the Oscar-winning actor Matt Damon and the tagline “Fortune Favours the Brave.” The firm also announced it had signed a $700 million deal to acquire naming rights to the Staples Center, the home venue of both the LA Lakers and LA Kings. It’s set to be renamed the Crypto.com Arena for the next 20 years. 

Last week, meanwhile, Crypto.com became the first exchange to successfully complete a Service Organization Control (SOC) 2 Audit, affirming that Crypto.com’s security practices, policies, and procedures meet all SOC 2 standards. The successful SOC 2 audit could make investing in cryptocurrencies through Crypto.com more appealing for institutions. Additionally, today’s Silvergate partnership should make onboarding easier, further removing barriers for institutional cryptocurrency adoption. 

Disclosure: At the time of writing this feature, the author owned BTC, ETH, and several other cryptocurrencies. 

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Silvergate Bank issues $100M credit line to mining firm Marathon Digital

Marathon Digital Holdings, a U.S.-based crypto mining company, has secured a $100 million revolving line of credit with Silvergate Bank using USD and Bitcoin.

According to information provided by Marathon Digital, the mining firm obtained the $100 million credit line from the crypto-friendly bank on Oct. 1. The company will use the credit to purchase Bitcoin (BTC) mining equipment and fund its mining operations. Marathon Digital said it expects Silvergate to renew the revolving line of credit annually after the initial one-year arrangement.

In addition, Marathon Digital reported it had produced more than 1,252 BTC — roughly $59.5 million at the time of publication — during the third quarter of 2021 with 340.6 BTC minted in September alone, a 91% increase over Q2. The increase in Bitcoin production follows the firm receiving 26,960 ASIC mining machines from Bitmain, with an additional 8,459 miners expected soon. Its current operations produce a hashrate of roughly 2.7 EH/s.

“While the rate at which we receive miners has fluctuated and may continue to do so in the near-term, we remain optimistic that we are well positioned to scale our hash rate to 13.3 EH/s by the middle of 2022,” said Marathon Digital CEO Fred Thiel.

Related: Marathon Digital plans ‘carbon neutral’ data center for Bitcoin mining

Some major U.S. investment managers and financial services firms have purchased stakes in Marathon Digital according to filings with the Securities and Exchange Commission. As of June 30, investment manager BlackRock owned a 6.71% stake in Marathon Digital, while Fidelity Investments purchased a 7.4% stake in the company for $20 million in July.

The increase in quarterly mining production could have been affected by reports of China cracking down on local miners as well as considering regulatory action on crypto. Crypto prices have likewise experienced significant volatility in 2021. According to data from Cointelegraph Markets Pro, the BTC price has risen by 16% in the last week to reach $47,627 at the time of publication.